Globalization
The Impact of the Internet on Globalization
The impact of the Internet on globalization is visible from the pervasiveness and visibility of brands globally to changes in the everyday lives of members of different cultures around the world. Globalization, while discussed as a business strategy, actually affects individuals far more often and with greater consequences than corporations. It could also be said that the collective experiences of individuals are what a corporation experiences from the context of globalization at a more macro socioeconomic level. It is the intent of this paper to analyze the implications of the Internet on the individual lives of people globally and the resulting impact on corporations. The Internet is serving as the catalyst for these many changes that both individuals and companies experience. The axiom that the Internet is shrinking distances is just part of the story; the fact that the Internet is forcing cultural distances to shrink as well, creating cultural conflict in the process is an area of globalization that impacts each individual differently. In that cultural conflict is the challenge of globalization, and the Internet simply intensifies this aspect of global relationships. The Internet is literally shoving people and cultures together that may or may not have a common ground; those common attributes need to be created faster than ever to keep communication open between individuals and cultures.
Globalization of Business Forces an Entirely New Relationship Dynamic The fact that businesses of all sizes and from all industries are striving to be more global than ever is acting as a catalyst, pushing individuals and cultures together in the pursuit of business strategies and initiatives. To claim however that the globalization of business is forcing a westernization of the world’s less prosperous nations is erroneous; in fact, the opposite is occurring. Workers in these third world nations want the same level of personalized, tailored products and services as they see in the world’s wealthiest nations, only tailored to their religious and cultural beliefs, which are quite different from westernized nations. A case in point is how Indian call center workers are discovering the purchasing power of their new incomes and the personalized products and services they can buy. The ability to create a consumer identity for many Indian call center agents is worth the sixty to eighty hour work weeks and the hundreds or even thousands of calls they take in a day. Some would call this getting the worst of the western world through globalization, yet for many Indians working in call centers the only other alternative is living in the village of their birth, often without individual television service or telephone service, surviving with little if any healthcare, and worse, no hope of things getting appreciably better in the long-term. Globalization has transformed many Indians from these villages and delivered them into an entirely different set of challenges, problems, and opportunities.
Globalization is most prevalent in developing nations who have large labor pools who can be taught skills, have infrastructures that support telephone, utilities including electricity, and in larger cities, broadband Internet connections. These large labor pools are what attract companies to seek out lower labor costs, often able to accomplish up to 35% to 40% reduction in labor costs.The earning power in the majority of nations is well below $10,000 per capita, with only 12% of the people working in the world earning over that amount. Nations whose per capita income is over $10,000 appear more westernized due to a wide variety of factors, not the least of which is the beginnings of as services-oriented economy. Any discussion of globalization and its effect on culture needs to consider the economics of income distribution and its effects on the ability of cultures interpret and understand one another.
The paradox of globalization is that the remaining 88% of the world’s population that does not earn over $10,000 a year represents the highest growth markets for westernized corporations, whose cultures are fundamentally different that each other. This paradox is what creates tension both for the westernized nations’ companies looking to expand globally on the one hand, and the frustration of consumers in these non-westernized nations with the often confusing messages from western nations trying to sell to them.
Globalization in Indian Call Centers: Training to Talk Like a Westerner
In analyzing and drawing conclusions from the impact of globalization on cultures it’s critical to see how this dynamic impacts individuals first. An excellent example of this is the incentives and training in diction, dialect and linguistics offered to members of Indian call centers, as is discussed in Thomas Friedman’s book The World is Flat (2005). Many call center representatives are graduates of Indian universities, and as a result have been studying English for at least ten years. Despite this training however, call center representatives experience strong bias and ethnocentrism based on their accent alone. Given the fact that outsourcing is a politically charged issue in the United States, it’s clear to see where cultural bias comes into play. Call centers throughout India regularly teach westernized diction, pronunciation, and urge the shortening of names to make them more pronounceable by callers from westernized nations including the United States. The point of these Indian call center exercises in dialect, diction, and linguistics is to make the exchange with clients half a world away more enjoyable for both and less confrontational based on cultural differences alone. Many call centers reward how many successful calls are “closed” or responded to completely on the first dial-in, and the Indian students of diction, dialect and linguistics successfully side-step the cultural and often ethnocentric bias of in-bound callers.
One could argue this is an example of globalization displacing the Indians’ culture. The fact that these call center representatives see the long-term potential of having excellent dialect, diction, and control of linguistics as a competitive advantage in earning greater salaries and having greater freedom economically is a powerful motivator. Many members of the call center industry in India were part of the 88% of worldwide workers who earn less than $10,000 a year.
Schindler’s Swiss Precision Meets Indian Chaos: Exploring Cultural Bias
When cultural values clash, especially regarding the perception of time, resources and their use, comparing individuals’ specific circumstances show how difficult international expansion can be for westernized nations. The mistaken perception that westernization is running roughshod over their counterparts is to ignore the flipside of the coin when it comes to the many challenges of globalization as well.
One case in point is Silvio Napoli, an ambitious and highly intelligent executive with Schindler Elevator Company in Switzerland. Mr. Napoli is an MBA graduate of the Harvard Business School and a strategist for Schindler when the CEO decides to expand into India. Mr. Napoli’s many challenges to move into India and set up a subsidiary are defined in the Harvard Business Review case study, Silvio Napoli at Schindler India (A) (2003). Mr. Napoli experiences culture shock, as does his family, and also faces the challenges of creating a supply chain, implementing a complex manufacturing process to sell and create build-to-order elevators, all while overcoming his strong ethnocentric view of the world as needing to run like a precisely-tuned Swiss watch. Numerous analyses of this case have been completed including one from LWC Research, whose Case Study Analysis (2005) uses concepts from Dr. Michael Porter’s Competitive Advantage of Nations (1990) to analyze what went wrong with the Swiss manufacturer’s move into India.
At the center of Silvio Napoli’s many challenges in just getting the fundamental strategies implemented is the need for this manager to cross the chasm of his own biases of surrounding the precision of time, the constancy and predictability of infrastructure. On top of all these challenges is his own leadership style being incongruent with and inability to quickly adapt and accomplish business strategies in India. Mr. Napoli comes from highly developed nations including Italy, the United States, and Switzerland where infrastructure including electricity, electronic communication, and water service are “always on” and assumed to be constantly available with no interruptions, yet are sporadically and unpredictably available in India.
In addition to these frustrations is Mr. Napoli’s perception of time as being a finite resource, where commitments get completed ahead of time or at the very least, on schedule, and there are no excuses for missing deadlines. What Silvio Napoli finds is that his tightly defined perception of time, prized in westernized nations, is not shared in India and third world nations in general. This cultural disconnect on the perception of time alone causes Silvio Napoli further ethnocentric responses to culture shock, culminating in his leadership style becoming more dominating and dictatorial. Distancing his Indian employees yet meeting reporting deadlines and in general accomplishing tactical goals, his strategic goals remain elusive because the Indian culture keeps sending him clues when he isn’t listening. In a matter of speaking, Mr. Napoli wins a few cultural “battles” but loses the cultural war. While he can control the Schindler offices in two Indian cities and enforce the company’s precision around time perceptions, the broader Indian culture is vastly incongruent with the culture Napoli is trying to create in the Schindler offices. Electricity being out for three weeks nearly forces an elevator sale to nearly be cancelled, no suitable drainage from massive rains floods his family’s apartment, and the Indian value of bartering and customizing is diametrically opposed to the strict discipline of a low-end product strategy where no variation in standard products is allowed.
Mr. Napoli’s experiences culminate in one year elapsing before a single elevator is sold, and that one sale is made when he’s out of the country and his Indian sales managers compromise and sell a customized unit. Mr. Napoli, upon hearing this while in Italy for the birth of a child, becomes angry and feels betrayed. While Mr. Napoli did have several excellent tactical victories, he lost the cultural war in his first year of working in India. No matter how strong-willed and stubborn, Mr. Napoli could not make even a small part of the Indian culture he was interacting with bend to his expectations. India taught Mr. Napoli patience and respect for its own perception of time, and the need for significant flexibility in business models when entering new nations and cultures. To reflect on his experiences, one can see how the westernization of third world nations is anything but pervasive and is simplified in many discussions. In the end, Mr. Napoli became more Indian vs. India becoming more like Mr. Napoli.
Key Findings on Globalization and Culture
In analyzing globalization and its impact on cultures, the reciprocal effects of one culture on another is a central focus on this paper. For every example of westernization influencing widely divergent cultures, the same holds true of westernized nations failing in their attempts to accomplish business strategies in widely divergent cultures. In studying the impact of globalization then it’s best to focus on case studies at the individual and group level. Observations, analysis, and conclusions gained at this level of analysis are useful for defining the broader implications of globalization across cultures. The lessons learned from this level of analysis are presented in this section.
First, ethnocentric behavior on the part of people and organizations force more compromise in all cultures affected by it and a moment of truth for many cultural members. What globalization is forcing however is a moment of truth for all cultures participating on a global scale, and that moment of truth is the questioning of ethnocentric perceptions of themselves and others. The moment of truth in ethnocentrism for Indian call center representatives was the call completed with no reference to outsourcing and services up-sold to clients in the U.S., the UK or any other western nations. For Silvio Napoli and others like him, the moment of truth was realizing that new and unusual cultures weren’t there to support their strategies, but that their strategies must support the cultures they are intending to participate in. Focusing on the personal interactions first and how they accumulate up to one cultures’ response to another is critical in seeing this dynamic. Applying social science research tools to ethnocentrism followed by culture shock, then assimilation and finally acceptance would quantify this trend.
Second, each nation and culture in the world has much more bargaining power than ever before because personal productivity is the most lasting competitive differentiator there is in manufacturing and service industries. According to Dr. Porter in Competitive Advantage of Nations (1990), personal productivity is the prime differentiator and competitive strength of economies and companies. Nations and cultures now have the choice of who they will work with or not. There is an increasingly level playing field emerging directly as a result of global economics playing out. Wal-Mart needs Indonesia and Southeast Asia for manufacturing workers and to keep their prices down, but these countries could easily push them away. They don’t because Wal-Mart brings work to these poor nations but must be monitored to make sure they do it ethically and without taking advantage of these disadvantaged counties who need the work. The bottom line is that there is a bargaining going over more than ever before between the nations whose industries need labor, materials, and unique competitive advantages the developing nations have. These latter nations literally have their choice of which nations and companies they will choose to work with. So an exchange is starting to appear between nations looking to cooperate with one another.
Third, if anything, there is an anti-Americanization and westernization sentiment running through many countries today, mainly due to the Iraq war and its many implications globally and tariff decisions regarding Europe. What is happening is that countries and cultures are demanding personalization and customization of their products and services at an unprecedented rate, not to make a political statement, but because so many companies are willing to make those commitments to them in terms of strategies. The fact that only 12% of the people in the world earn over $10,000 a year per capita highlights the fact that the Americanization of economies is nearly complete, as the UK, Australia and other highly westernized nations are at competitive parity with the United States. The challenge in terms of globalization is not standardizing and homogenizing processes but the customization of them to countries much poorer and complex in their needs than westernized ones. The bottom line to this point is the product customization and personalization throughout Muslim-based nations is the biggest challenge for any American-based corporation today and yet, one that holds the greatest potential for future growth.
Fourth, the conflicts at the cultural level continue and get resolved faster due to the globalized nature of many societies and the “landing zones” that appear nearly overnight in major cities around the world to assist immigrants get acclimated to new cultures. Take the Indian community in London for example, and the fact that thousands of Indian nationals arrive at Heathrow Airport every week and need to find food, a place to stay, a job, and work in English society. The assimilation occurs very quickly and is one that melds their own cultural morns with those of the British. The result is that the assimilation process is much faster for Indians and they quickly find their own lives in Britain. Why this matters to a discussion of globalization is that the size of these “landing zones” and their speed of assimilating people passing through them has greatly increased since the Internet was discovered and widely used.
In summary, cultures impact and are constantly being impacted by globalization. There is no homogenizing of the world going on apart from those areas who welcome it; the fact that Pakistan has McDonald’s is by choice for example is not due to overt efforts from McDonalds’, it’s because local businessmen wanted to invest in one there. The knee-jerk reaction to the Americanization of the world is false and ignores the fact that 88% of the worlds’ people are making less than $10K a year in income, yet they represent the fastest growing segment of many markets. In that paradox is the challenge of globalization for companies and even entire nations.
Summary
Cultures influence and impact one another at a personal level first, comprised by millions of moments of truth that over time define how cultural values conflict or align with one another. As a result of these moments of truth accumulating over time, cultures define their distances from each other. The purpose of this paper is to illustrate through case studies, empirical evidence, secondary research, and primary research from interviews with people who attempted to assimilate into cultures radically different than their own and the insights gained.
References
Case Study Analysis (2005) – From the research and advisory firm LWC Research. Orange, CA. Accessed from the Internet on November 21, 2006:
http://lwcresearch.com/filesfordownloads/SchindlerCase.pdf
Competitive Advantage of Nations (1990) – Dr. Michael Porter. Article from Harvard Business Review. Boston, MA. March – April 1990. Pages 73-91.
Selling Into India: Lessons Learned From Silvio Napoli (2005) – Article from CRM Buyer Magazine. Louis Columbus. April 22, 2005
Silvio Napoli at Schindler India (A) (2003). – Accessible after purchase from the Harvard Business Review Website: http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml;jsessionid=3XHOCFKZZ3NGQAKRGWDSELQ?id=303086
The World Is Flat (2005) – Thomas R. Friedman, author. Farrar, Straus, and Giroux. New York, NY. Published 2005
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